Ask the Readers: How to Cope with Financial Mistakes?

Nobody’s perfect. This should be obvious, but we all tend to forget it — and often. We judge other people for their mistakes, and often we judge ourselves even more harshly. I do this too. When I do something that I know is wrong (or merely foolish), I get down on myself, which often leads me to make further mistakes.

Lately, for instance, I’ve been struggling with my diet and exercise. I spent eighteen months losing fifty pounds and developing strong habits. Now, though, with the stress of my mother’s health problems, I’ve gained back a few pounds. I’ve made poor choices. Fortunately, it’s not irreversible damage. Over the past week, I’ve worked hard to return to good habits, but it hasn’t been easy.

In years past, I often struggled with financial mistakes. In fact, I still do sometimes. And I’m not the only one. Rudy wrote recently to share his own experience, and to ask how other people cope with money mistakes. Here’s his message:

I think I’ve made a big financial mistake. I spent too much on a night on the town. Sure, I enjoyed it, but I had a little too much fun, and now have a huge credit card bill. I have the cash to back it in savings, but it still stings. So, I’m sucking it up, admitting that it’s a mistake, and paying the bill right away.

My question is: Have you or any of your readers had a similar experience? Maybe with a larger-than-expected restaurant bill, or spending too much on a hobby, or spending too much on gambling? I’d love to read about how other people handle financial mistakes. Some advice on how to avoid this in the future would be good.

Nobody makes it through life without mistakes. And nobody gets rich without a few stumbles along the way. When you do something dumb (or when something bad happens to you), it’s easy to get discouraged. You can waste a lot of time reacting to problems — bounced checks, emergency car repairs, and the like. Because of this, the best way to deal with financial setbacks is to prepare for them in advance.

From my experience, there are two primary ways to proactively protect your finances from peril:

Education. The more you know, the better you can cope with problems. Read personal-finance books, magazines, and blogs. Find folks in your life who have control of their finances, and ask them for advice. Learn how others deal with common emergencies. One great side effect of education is that it reduces stress; when something goes wrong, you know others have found a way out, and that you’ll make it through too.

Preparation. But education isn’t enough. You also have to take steps to prepare for routine mistakes and setbacks. One of the best ways to do this, of course, is to start and maintain an emergency fund, a stash of cash to be used only when things go wrong. Putting $500 or $1000 or $10,000 into a savings account is cheap insurance; with a cash cushion, your financial plans can’t be derailed by a single crisis (unless it’s big). Making sure your actual insurance coverage is adequate is another great way to prepare for problems.

Even if you’re prepared and educated, you’re still going to make mistakes now and then. Rudy seems like smart guy, yet he still piled up credit-card debt through a night on the town. Despite my war on clutter, I still buy Stuff that sits around the house.

It’s important to know how to pick up the pieces when things fall apart. Here are some of my favorite strategies for minimizing the damage:

Don’t panic. Try to relax and don’t freak out. After you’ve made mistake or suffered a setback, spend some time to distract yourself. (Without spending more money.). Better yet, sleep on the problem. It’s amazing how a little time can provide much-needed perspective.

If possible, undo the damage. Some mistakes are reversible. If you blow a bunch of money on new clothes or are feeling buyer’s remorse over your new stack of books, for instance, it’s possible to set things right by returning the items. If that’s not an option, you can often sell things to recoup some of the loss.

Don’t dig a deeper hole. Money spent is money spent. Just because you’ve already sunk $200 into a gym membership you’ll never use doesn’t mean you need to keep spending on it. Cut your losses by getting out as soon as possible. And whatever you do, don’t spend more in an effort to assuage your guilt.

Keep your goals in mind. A setback is just that: a temporary roadblock on your journey to something more important. Make peace with the past and keep your focus on the future.

I had a conversation with my Spanish tutor recently about American superheroes. She doesn’t like them. “They don’t have to work for anything,” she told me. “Their powers don’t come from hard work. They’re just given them.” I wanted to argue with her but couldn’t. She’s right. From her Peruvian point of view, my tutor believes it’s more impressive when people overcome failure and long odds to succeed.

Similarly, there’s a Japanese proverb about perseverance that translates as “fall down seven times, get up eight”. I like that. And I agree. Successful people fall just as often as the unsuccessful; the only difference is that successful people learn from their mistakes, get back on their feet, and resolutely march toward their goals.

Have you worked to overcome financial mistakes or setbacks? Have you been successful? How did you keep from giving up? How did you learn to make better choices? What tips or tricks can you offer others to help them get back on their feet? And do you have any specific advice for Ruby regarding his mistake?

Note: Portions of this post were derived from my book, Your Money: The Missing Manual. I recently learned the book has sold 10,000 copies and that I’ve earned back my advance. Awesome! I’m grateful for the support, but I’m even more edified by the kind e-mails I continue to receive from readers. I’m glad the book (and the blog) have been able to help others achieve financial success.

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As the proverb you quoted gets at, the problem isn’t *making* the mistake. I’m sure even Warren Buffet has made mistakes with his money. The problem is when you stop doing what you know you should simply bc you made a mistake. In my dark days of finance, I would start to clean up my finances, but the second I had a set back, I gave up completely. “What’s the point of trying?! I can’t do it right!!!”. Now I realize that the goal isn’t perfection, it’s persistence. If I have a slip, I challenge myself to minimize the impact on my finances. So I turn the mistake into something I can succeed at. That little shift in my emotions towards the mistake helps keep me moving forward, rather than giving up.

I wasted over a hundred pounds to reduce the insurance excess when I joined a car club. I didn’t intend do, but I got tripped up by the phone sales people, and didn’t notice until I was past the cooling off period.
I try not to stress about it, but the memory does help when people try to pressure me into other things I don’t want, like extended warranties. I still hate it though. I’m not a confrontational person, and you seem to have to verge on the edge of rudeness to get them to give up.

perhaps it’s different in the UK but we do have extremely persistant sales people in the USA especially of the “extended warrenty/insurance/repair plan” sort.

I have found pretending to be a pleasant broken record to work. Using “No thank you, I do not want ABCXYZ” in the exact phrase, in the same tone each time the offer is pressed usually sinks in and short circuits the salespitch after 3 tries. Sales are geared toward “overcoming each objection” so if you present them with the same denial-without-objection over and over again they just don’t know how to deal with “I don’t want it jes cuz.” :)

I’ve learned not to be beat myself up over financial mistakes, especially with budgets and financial goals (like saving up for my next car). I try to take a step back and examine why I didn’t make a goal.

I then write a new date to reach the financial goal and keep working at it.

@SF_UK: and since you’re probably from the UK, that rudeness includes saying such things as “Dear chap, would you mind to stop talking about this, please?” and “Thanks for pointing this out to me, I’ll consider it”. Just pulling your leg, :-) .

I think the thing with making mistakes indeed is, to hit yourself over the head for making the mistake exactly one time, try to learn something from it (next time, I’ll …) and then get up and continue towards your goal.

But it definitely isn’t easy, you can feel very stupid and mourn money lost…

I had a rate lock guarantee when we recently closed on our mortgage refinance. Because I drug my feet and did not return one document in time, the loan did not close within the rate lock period. This caused the fees to increase, which ended with me having to pay $800 more of closing costs than I would have previously.

I was mad at myself, but I had to look at the big picture that even with this additional spending, our mortgage would still be much better off, and we would still save thousands in the long run. I think it helps to focus on the big picture, once you have nailed down the basics.

If you do your monthly or weekly budget, can you do mistake? Very less chance of it. If I over spend I either look for ways to cut back on other things to compensate or try to find ways to earn that much extra money when mistake is more than what can be saved.

First of all, when it comes to mistakes, think of all the things you did correctly, whether the mistake is financial in nature or otherwise. J.D. was bemoaning the fact of gaining a few pounds after losing 50. Losing 50 pounds…that’s HUGE! Everyone makes mistakes; focus on the things you did correctly; not only did J.D. lose 50 pounds, but also developed “strong habits.” Very commendable, J.D.!!

Secondly, as mentioned, it is necessary to establish an emergency fund, which should be in a liquid account, enough to adequately cover the number of months’ expenses it would take to find a job if you lost your current one. You might also want to consider establishing a splurge fund so you can have a night on the town. After all, if you’re on a diet you can have chocolate cake occasionally.

What I like about JD’s “emergency” fund advice is to start *small*. $500-1000 is enough of a cushion at first to keep minor setbacks from forcing you to use a credit card. I think people get too hung up on the “3-6 months” rule, and as soon as they have to dip into it, they get discouraged and give up on the emergency fund altogether.

When you go out, especially with other people, it can be easy to get swept up in the moment and buy more or do more things than you intended to. I would suggest a few things for the future (as there is no regretting the past – just pay the bill and move on). First, when you go out, take only cash in your pocket and leave the credit at home. When the money’s gone, the fun’s over.

If that isn’t possible, plan ahead for the outing and plan to go a bit wild (within reason). You won’t feel so bad the next day if you planned to do it.

If going out is a regular thing, see if you can suggest cheaper places or activities. At the least, you can choose only dessert and drinks instead of a meal, or only the specials at the bar instead of premium beer, etc.

From my experience with making (and regretting!) many financial mistakes, these things have helped me quite a lot. If all else fails, admit that going out is your weakness and try to avoid it!

Having regular, planned splurges helps keep me on track. It’s easier to say no to myself on day-to-day extras if I know that a planned splurge is coming up. For example, I’ll take my lunch to work all week if I know doing so will mean we can afford a nice dinner out on the weekend.

I’m pretty careful with my budget, but I found a big mistake: not keeping some cash in an easily accessible account. My emergency fund and savings are all in accounts that have a one-day wait period for transfers. Normally that works well for me…

… Except the one time my company didn’t pay us on time and I had an automatic transfer going into my retirement savings! (The transfer was dated one day after the pay check, but my company was two days late!)

It was a scramble to figure out how to cover the money for a day without incurring any fees (like if I had to take a cash advance on my credit card or go into overdraft). Luckily, I made it work — but needless to say I made a few changes as a result!

It was probably silly to worry about the fees, but I hate to lose money because I did something stupid.

Beth, That has happened to me too!
I personally feel like those instances are not my mistake – you (and I) plan for a one or two day cushion, but sometimes things dont go the way they are planned. Even tho they’re not my fault, i get very upset – like one commenter said, it makes me feel like giving up. But when I step back and see how much money i’ve SAVED on late fees in the past by having these things set up automatically, it helps the sting to wear off a little more quickly.

Beth, glad it worked out for you! This reminds me of a lesson I learned from my mom: always keep a cushion in your checking account. I used to ride my checking account close to what I exactly needed in order to maximize interest. During high school, I had a couple of overdrafts at various points. My mother quickly pointed out that one overdraft fee canceled out all the extra money from interest. I now keep at least $1,000 just sitting in checking as a cushion in case something goes wrong.

Keeping the buffer in checking is OK. I think it’s probably even better, though, to keep the buffer money in a separate savings account at the same bank/credit union where you have your checking account. That way, if you need to transfer money quickly, the transfers are usually instant. I also think it’s a good idea from the standpoint of keeping the buffer money clearly separated. Just my opinion, of course.

I keep $3500 in my chequing as part of my emergency funds and in wards of my bank fees (Canada doesn’t have free chequing at brick and morter banks that I need to use).

My car insurance came out 2 days early, which because I was playing things close to the wire caused me to dip below the $3500 right before midnight on the last day of the month, and cost me $14.95 in bank fees for August.

I don’t even have a column on my budget for bank fees!! I’ve not paid one in years. I was pretty distraught that I hadn’t considered the insurance might come out before I got paid.

“I had a conversation with my Spanish tutor recently about American superheroes. She doesnâ€™t like them. â€œThey donâ€™t have to work for anything,â€ she told me. â€œTheir powers donâ€™t come from hard work. Theyâ€™re just given them.â€ I wanted to argue with her but couldnâ€™t. Sheâ€™s right. From her Peruvian point of view, my tutor believes itâ€™s more impressive when people overcome failure and long odds to succeed.”
I’m a little bit disappointed here, although I stopped reading comics around 2000, I read them for about 20 years, plus back issues, and I think you didn’t put heroes into context with your teacher. Some of the better comics have extended human frailities into their heroes. “Great power…great responsibility”, etc.. Many heroes (not all) are basically human or human like(mutant) with powers, they still have many of the same weaknesses that they must overcome. They still have the power of choice, whether to be evil or good, to make sacrificies, etc.. They also have obstacles and failures to overcome and the odds are often long with consequences for failure that could be devastating to them, their locale or humanity. Many of them fail and fail hard multiple times, getting back up each time. Obviously its not real, but just being given powers isn’t enough to be written off. Many real humans are brought up in wealthy environments, are incredibly brilliant and are given advantages or sometimes breaks few humans get, but they squander them or don’t work hard. I think you could have done more with the human/superhuman parallel.

Hey, a big night on the town is really no different than travel. It’s a lifestyle choice and leads to great fun and memories. It should be treated the same way. Save $25/week in a designated fund. When it reaches an amount that you need, then have at it! Laissez les bon temps roullez! At that point, you’ve earned it.

That’s similar to what I was going to say. In my humble opinion, life is about experiences. It is great to pay off all your debt and make amazing financial decisions but if at the end of the day you have nothing (memory-wise) to show for it, then was it really worth it? I choose to pay off my debt WHILE still allowing myself to create memories. This reader probably had a great night out full of fun with his friends. He spent an entire evening connecting with his friends. Sure, maybe next time he’ll better prepare his finances for the occasion but I don’t feel like he did anything wrong. Spending time connecting more deeply with those you care about is a wonderful thing.

Hey Lindsay and Dan, check this out – from a psychology professor at Cornell:

“If youâ€™re conflicted about whether to spend money on a material good (say, a computer) or personal experience (say, a vacation), the research says youâ€™ll get much more satisfaction â€” and for longer â€” if you choose the experience. Most of us, it turns out, get more bang from the experiential buck. Indeed, when people are asked to recall their most significant material and experiential purchases over the previous five years, they report that the experience brought more joy, was a source of more enduring satisfaction and was more clearly â€œmoney well spent.â€

My husband almost made a huge mistake once, by signing car purchase papers before they typed in the numbers! We got it back, looked at it, and realized they were charging us thousands of dollars more than the price we had agreed on. Luckily we were able to work it out, but it sure taught us a good lesson! When I bought my car a few years later, I was so on top of things!

Also, sometimes I feel like shopping is a “mistake”, even if it isn’t really. Like yesterday, I spent roughly $200 on clothes. It seems like a ton of money, but in reality, we needed most of them, and we have the money for it.

We just moved from Arizona to Pennsylvania and had almost no cold-weather clothes. So while I might have been able to spend a little less if I had gone to Walmart (cheap, ugly clothes that will fall apart in 6 months), these will last at least a couple years.

How do you determine what is a mistake, and what is spending you can afford but feel guilty doing (because you feel like you shouldn’t spend money on clothes if you have a closet full, even if they’re the wrong season)?

i cannot agree enough on buying quality goods. i was spending money left and right before the recession and bought myself a lot of high-quality clothes i couldn’t really afford (hmm). anyway, broke as a joke now and climbing out of the debt-hole for another year, BUT those goods have mostly held up with a small repair occasionally. it’s mildly comforting to at least have nice clothes when you’re not feeling particularly wealthy, and doubly so when they can last multiple seasons. i’ve hardly had to buy a thing since.

now if i can only attain the pre-recession flush levels again and go shopping :D it’ll be a long while before i can blow $250 on a trendy coat then $200 on leather boots and $90 on a white shirt (what was i THINKING?) again.

That’s why I prefer Batman! :D (Also a good financial model, since he uses the inventions from his business in his crimefighting, the information from his crimefighting in his business, and proceeds from both in charitable works.)

Alas, Batman is no better. Because when it comes down to it, what’s his superpower? Vast wealth. Vast wealth that he was given. He didn’t have to work for anything either. I wanted to argue for Batman, but couldn’t. :(

I have to read (ahem) the Batman stories again, perhaps. But I think Batman may still be a better story than other superheros. At least he knows how to work with his money to earn more money (he runs his business well and is not spending all the money he was given) and he uses his money for good and useful things mostly. (His car’s a bit expensive, but hey…).

When we make mistakes, such as overspending on something, I “penalize” our budget forward. For example, we spent more on our vacation this year than we had intended. We had the cash in savings to cover the credit card bills–no problem there. What we’ve agreed to do is take a less expensive vacation next year, so the two average out to what we normally would have spent on each. The difference goes back into savings. Same holds true for dining out: if we spend more than we intended on one occasion, it means less pricey meals out going forward. That way we are meeting our average spend–just in a different way.

The most important thing is to not feel debilitating guilt–that’s what leads to the getting down on one’s self and repeating the cycle. I’ll echo the above comments: acknowledge that you had fun, that memories were made or that a good meal with friends was a positive experience, then redouble your efforts to stay on track. I don’t regret one cent of what we spent on vacation; we had a tremendous time. But that doesn’t mean we can do it every year.

There’s been some studies recently about will power and decision-making. The more times one has to make a decision, the more it wears down our will power (I think Sierra Black had a post on this recently, that featured a Snickers bar). I think that plays into this too.

I made a whopper. Six years ago I had a 50-mile commute each way, and several small kids. I convinced my husband to look for homes near my office. There wasn’t a lot on the market, and we ended up overpaying for a house that was definitely on the small side, and needed a lot of work.

Financially this house was a mistake. Our mortgage more than doubled. We’d be in a much better financial place with the last house we owned. (Note, we aren’t underwater, our mortgage is still affordable to us, and our financial affairs are in order.)

I get over this by looking at the intangible things we gained: I get 2 hours more per day with my kids. We live in a fabulous neighborhood for kids to grow up in (very 1950s), and we adore our neighbors. We really love the town. As a busy dual-income family, we’ve found value in a small house and yard … less to clean and maintain.

When I look at the full picture, these intangibles outweigh the financial cost.

As long as the mortgage payments are affordable for your family, I think that was the right decision! Kids grow up so fast that having more time with them on a daily basis is HUGE. I’d make the exact same decision in your shoes. :-) And neighbors you love? Priceless!!

Keeping a monthly review, noticed one pattern or mistake we keep making. If we have a flush month with extra money we end up spending pretty much all of it on one thing or another. Then when a month comes by that has no extra money and in fact extra expenses, like 1K in car repairs, we are behind the eight ball. We’ve had a couple months like this. I need to change my mindset that that any “extra” money a given month is not really extra money. We don’t do allowances so we need to figure out another way to handle this perception of how much money to spend.

Try to estimate how much you spend per year on expected (or unexpected) expenses that are only once a year, twice a year or four times a year. Add up the amounts, add some extra to be sure and divide by twelve. Put this money aside, every month, in a savings account. If one of these expenses comes up, pay from the savings account.

I did this by going through my bank statements of one year, and found a lot of once-a-year expenses this way. (Holiday, subscriptions to magazines, charity, Christmas shopping, life insurance). If you have a car, you know you’ll probably spend a certain amount of money for repairs and replacing parts each year, even though you don’t know exactly when.

We made a big mistake in putting TOO much trust in our financial adviser. He recommended we margin some stuff. The timing of this? Right before the huge crash of 2008.

Needless to say, we didn’t have the cash to cover the margin call, so we had to sell stocks off like crazy to cover it. Ouch. Lost close to $180,000.

Granted, we know the crash of 2008 was unprecedented and even many financial advisers didn’t see it coming.

What we learned, though, was that our financial adviser had a tolerance for risk that was very high… but he was “selling” it to us as if it was a moderate risk.

We don’t expect financial advisors to be perfect… but we do expect them to watch our money as closely as they watch their own. Sadly, this particular advisor wasn’t overly concerned with what was happening with our money — and he advised something that was laced with outrageous risk.

Lesson well learned. Our fault. We know. We signed off on the papers. But still stings a bit.

back when there was money enough for such things, I tended to monitor any financial services provided in a “fee category”.

one thing I found working in finance was you have to pay attention that they aren’t “making work” for themselves swapping money around because their fee structure actually encourages them to do so for maximum return.

i.e. don’t be surprised if right after the small talk of mutual commiserating about having a kid just entering college this fall, your financial advises all sorts of unique trades “just discovered”.

I think this is exactly why many folks I trust & admire suggest using “fee only” financial advisors – at least then you know they don’t have a conflict of interest or hidden agenda in getting paid from trading commissions.

So I just recently made a huge mistake…I bought my dream home. I set a budget, and spent 18 months looking for a home, and then found a home, but it was $70K more than my budget.

I bought it anyway.

I bought it for several reasons:

1) it has $100K worth of upgrades the previous owners put in to it;

2) it is in an ideal neighborhood;

3) it is in an ideal location within said neighborhood;

4) interest rate on the mortgage is 4% (I was afraid rates were going to go back up)

The mistake part comes in more than just the purchase price– I hadn’t sold the home I was currently living in at the time. I ended up losing $14K on that home, AFTER it sat on the market empty for 7 months before I found a buyer (renting it out was not an option…I really lost over $20K on it)

However, I knew if I didn’t grab the house when I found it, someone else would snatch it up in a matter of days (if not hours). When I closed on the new home, I was told by my realtor the current owners had *two* offers on the table for more than their asking price, and were secretly hoping I wouldn’t be able to close.

So, I got a fantastic home. I lost a boatload of money. I made my September payment this morning before going to work, and wow does it hurt writing a check for $2K to my mortgage company (previous payment was $700).

I also had a ton of problems with the house after I moved in, all relatively minor, but an annoyance nonetheless. I sat down and did a pros/cons of moving out and turning into a rental for a few years until I get my savings built back up, and basically the sheet comes out even.

I think this is an example of what I’ve heard we all do many times. We make an emotional decision and then put together all the logical reasons we did it. Then we think we made a logical decision.
Truly most of our decisions are emotional.

I find that it’s not really financial mistakes that make me feel guilty, but any sort of purchase that is not a necessity. Did I really *need* that new book? Or DVD?

As a student, I know I need to keep a close eye on my finances to make sure I have enough money for the basics each month. But sometimes this makes it really hard to let go of the purse strings.

I don’t have a set budget for any category, more I’m just watching what I spend to make sure I stay under the amount I have available. This means, if I buy a lot of books, I have less money for groceries or eating out.

I do think having some money set aside in your budget (or head) for “whatever” purchases could help with the guilt. You spend to much at dinner/evening out? That comes out of the whatever category and now you have be more careful until next month.

I’m very lucky that I’ve never gotten into credit problems. My only debt is a mortgage with a great low interest rate and manageable monthly payment. I’ve always paid my credit card bills in full and on time, having absorbed that lesson as a child from my mother. My husband and I are savers by nature and keep a detailed budget as well as continuing to track every penny spent.

Here’s where I run into trouble: sometimes we go overboard on spending and then I stop or slow down on my weekly bookkeeping, which allows us to keep spending on our new passion because I don’t know how far in the red that category has gotten. Last year, a friend gave us a 30 gallon fish tank after hearing that our kid wanted to get sone fish. Free tank means free new hobby, right? Nope. I was shocked at how expensive it was to get the basic things you need for a tank: gravel, filter, water quality tests, etc. And boy did we get hooked: within two months of that 30 gal tank, we had bought an 80 gallon tank off Craigslist, which we proceeded to spend a fortune on so we could have a planted tank, which requires expensive grow lights, expensive fertile substrate, etc. By year’s end, we had three tanks running in the house, which btw made our electric and water bills double. We spent over $5,000 on this “free” new hobby. And because I gave up tracking spending after the 80 gal tank purchase, when I had to close our books for the year, it meant a HUGE bite out of our emergency savings on stuff that was clearly not anywhere close to an emergency. That was painful to realize.

Anyway, long story short(er), I learned a good lesson about the dangers of not keeping close track of spending as well as how easily spending can snowball out of control if I decide, “Oh, we’ve already spent so much, what’s another couple hundred bucks?” It’s just like watching one’s weight — if you find yourself inhaling donuts, you can’t just decide “What the hell — I’ve already blown today so I’ll just eat anything I want” and go on a major calorie binge. You have to stop yourself and get back on track starting from where you are.

My point? Like J.D. said, *everyone* makes mistakes, and the important thing is recognizing those mistakes and learning from them rather than beating yourself up for having made them in the first place!

(Please forgive any typos I’ve made — I’m away from home and pecking this out on my iPod. Thanks!)

Timely post for me. We were under a time crunch (as well as dealing with a 19 yo) and foolishly bought a used jeep from a dealer on a weekend, thus could not get it to our mechanic first. When an issue developed w/in 24 hrs, we left the jeep at the garage on sunday night. Our mechanic informed us that, among other things, the front drive shaft had been removed, rendering this jeep NOT a 4×4.

After a nice conversation with the dealer assuring us he’d make it right, we realized he had no intention to. Long story short, we have already gone through 1 round of small claims court (we “won”) and they have appealed.

We are spending money in attorney’s fees and are really beating ourselves up about making a really foolish mistake. It wasn’t falling off the financially sound bandwagon, just a really stupid mistake that IS costing us.

We have the money (for the attorney and for the vehicle should we be forced to buy it) but it has NOT been a fun experience (and we’d rather have our money).

Most states have a 3 day “cooling off” period which usually permits the buyer to rescind the contract without repercussions. I am not sure which states differentiate between calendar days and business days. That’s a great thing to take advantage of. Although, I recognize you are already past that stage.

I neglected to do so and ended up committing to a health club for three years. They were automatically deducting payments and we never went. That experience has made be unbelievably leery of automatic deductions. DH has opted for another health club where we can cancel at anytime. I have come to the sobering realization that I do not like health clubs, I like to exercise in nature. A GRS post that spoke to spending based on who you are and not who you desire to be.

Thanks for the comments. I don’t believe my state has such a cooling off period. The jeep was back on his lot and the dealer had the keys in his hands (with new wiper blades and more gas) in less than 48 hours total. The 3 day rule makes sense in regard to our issue though (buying on the weekend when our mechanic was closed).

We actually stopped payment on the check on Monday and it never went through — thus him taking us to small claims.

So far we’re “only” out the money to our attorney for the first ’round’, where the case was dismissed. Now we face mandatory arbitration and more legal fees.

Oddly, we offered the dealer a few hundred dollars “for his trouble” both when we returned the car and when we rec’d notice of the small claims suit. He declined both times, but he seems to be getting some pressure from his own financing company.

Definitely a lesson learned on not cutting corners and a civics lesson to boot!

Oscar Wilde said something along the lines of, “‘Experience’ is the name we give to our mistakes.”
Beat yourself up a LITTLE, i.e., “That wasn’t a smart thing/what I’d planned to do. What caused me to do that? How can I recoup some of my loss/keep this from happening again?”
I had a conversation with myself like that this morning, J.D., and it had to do with overeating/weight gain. Why do I comfort myself with food? (For several complicated emotional reasons from my past.) What are some ways that I could care for myself without ultimately harming myself? (Exercise, talking with a friend, reading, writing a blog post…)
Doesn’t mean I’ll instantly fix what’s wrong. It *does* mean that I’m aware of the tendency and want to find smarter ways of living.

I don’t really let mistakes bother me too much, and I think that’s key. Recently I got a call from Diner’s Club telling me I was past due on my credit card balance. Normally I don’t use credit cards at all, the only reason I even have this one is because my work supplies it for me. I had been traveling and rented a car, and they insisted I pay with a credit card instead of my ATM card (which was a bit strange, as normally car rental places have taken debit cards from me). Anyway, because I don’t normally have to pay that bill, I forgot about it for several months until I got a phone call about it.

Turns out the current balance was like 40% more than I actually spent on the car rental, because of late fees and such. I paid it immediately and now have a $0 balance on the card again. It was annoying, but I can chalk it up as a legitimate mistake and something that doesn’t happen often.

I’m more upset by other things that are unexpected but not really mistakes. Like use yesterday, I went to change my health insurance plan from one for my wife and I to a “family” plan to cover our new daughter. It costs *twice* as much! How can three people cost twice as much as two? Now I’m paying almost $600/month for health insurance, and unlike the mistake with the car rental, there’s not much I can learn from it or do about it next time, this is just an extra $300/month that I didn’t plan for, but will be ongoing.

The cost of the first 10 years worth of her doctors visits probably won’t add up to the cost of her delivery, which counts as my wife’s medical treatment. There is no way she is actually more expensive than one of her parents.

The real reason is because there is a single “family” rate regardless of family size. Five kids cost the same to insure as one kid.

I have a savings account called “Stupid mistakes” with ING – one of the pieces of advice from Ramit Sethi that I appreciated. So far, I’ve used it a few times – once when I bought a dress that wasn’t budgeted previously, a fun night on the town, and when I got fined for putting my trash out a day early (thanks City of Cambridge).

i don’t know if this would work for me personally- if i knew i had a cushion i’d probably be a lot more likely to make stupid mistakes (“oh, i have a fund for mistakes, i can cover this darling new hat!”)
i ended up making myself an allowance fund, which isn’t quite the same but lets me have some guilt-free blow money. anything else gets lifted from the emergency fund, and it hurts- i think you need the pain there to teach you a lesson to not make stupid mistakes!

One mistake both my wife and I made was signing a huge 5k plumbing contract for a new main sewer trap for our house. The contractor told us we had roots and needed immediate replacement, only after signing and doing more research did we find out roots usually treatable for $50 a year if that.

We eventually had to fight them in court and lost only $650, but the lesson is to never trust contractors and never get pressured into signing something!

This post came at the perfect time! My weakness is clothes shopping, and the month of August was bad. Luckily, I returned two items that were cute but just didn’t fit right. I kept the other stuff because some of it was non-returnable (clearance), and all of it that I kept I love and will be part of my staple wardrobe. Still, the sting of the credit card bill is tough. I also stuck with my one-in, one-out rule, and sold clothes/jewelry I didn’t want to Buffalo Exchange and got some money back.

I know everyone makes mistakes, but it’s helpful to have a friendly reminder I’m not the only one.

I recently found myself in a position to buy a sweet bike from a friend of mine, which would be quite a splurge but a good purchase for the long term (I bought my last high-end bike 13 years ago, and it’s still in good shape). After some discussion/debate with my wife about the expense, I got motivated to sell off a bunch of stuff, and ended up making more than the cost of the bike! I probably wouldn’t have ever gotten around to selling that stuff it I didn’t have the guilt/motivation from this purchase, so I killed two birds with one stone.

I made a big mistake in 2009. I bought a used piano without reading up on how to do just that (there is a specific article on buying used pianos that at least 3 people sent me after the fact). I wanted a piano so bad that I answered the first ad on Craigslist that I could find. I paid for the piano, I rented a moving truck, and I roped a couple of neighbors into helping me. (I still feel bad sometimes when I see these particular guys.)

It turns out that only 67 keys on this piano worked, the insides were a mess, and transporting it without professional help made things worse. After all those expenses, and two consultations from piano technicians, and eventually having the thing hauled away, I was in for about $700 and a whole lot of shame. I just absolutely didn’t do anything smartly in this situation and I often refer to it as “the biggest mistake of my adult life.”

But, if that was the biggest mistake of my adult life so far, I’m doing pretty well. I actually tell this story a lot because I can hear how much perspective I gained from it and some days I can even laugh about it.

The U-Haul and everything else have been paid off for a while. What tends to linger is my own embarrassment. But since I can admit my mistakes, learn from them, and move on, I am less likely to make this mistake, or something far worse, later in life. (Plus a friend of mine visited and wrote a “67-Key Opera” on my crappy piano so that was good for a few laughs to ease my embarrassment.)

My wife and I got educated and got out of debt (except for the house) few years ago. I got so excited and inspired that I decided to change lives by developing my own “Celebrating Financial Freedom” course to teach people how to get out of debt.

Ruby probably could have prevented his slip up by spending cash for his night out on the town and when the cash runs out that’s it, you don’t dig yourself a hole and end up regretting your good time (financially anyway).

How about buying a house which the sellers refused to make any concessions? That should have been a huge red flag, but we bought it anyway and it cost us a good bit of time and money over the next several years.

We have a phrase in our home
“Some lessons are more expensive than others”
And we have certainly had our share of expensive lessons (the hot tub with a 90% *rebate* – my stomach still churns just thinking about it), and ones that should have been expensive (I left the doors unlocked on the car – and all that happened was someone rifled through the glove box), and lots that we just get right the first time. This sort of roll with the punches philosophy has allowed two pretty tightly wound individuals to ‘get over’ and move past mistakes, remebering the important thing. Sunk costs are sunk costs, what can we do to avoid this in the future? For one – never buy another hot tub. Oy, there goes the stomache again.

Bought a cheap camera at the thrift shop to indulge in a photography hobbie. The idea was to start cheap to learn the art. I soon realized the price per processing the film was about $10 which can add fast if I really want to learn. Now I can’t decide whether to spend $500 on a good digital camera or just take it easy. I have seen many cameras but have not gotten myself to buy. The old camera is a nice Canon with a macro lense, etc. Should I forego the hobbie before regretting being $500 short?

No, you should probably buy a CHEAP digital camera (there are some very good ones for $100 to $120) and learn how to take good photographs with it.

THEN and only then should you decide if you want or need a high-end camera.

The gear will not determine your success at the hobby – your persistence in practicing and learning will.

Digital is the cheap way to learn quickly and everything you learn about good composition, etc. can be applied to a film camera later on – if you really want to use one. My DH has a very good film SLR that he never uses anymore.

I was thinking of buying a digital SLR and asked a friend of mine, who’s a professional photographer, what she recommends. I had been admiring her photographs online.

She laughed and said she gets sick of lugging around equipment so she bought a decent point and shoot. :) I resolved right then and there to spend more time mastering the camera I have before I buy anything else!

I’ve debated a lot over an DSLR as I needed to replace my point and shoot. It had been dropped a few times to many and was becoming unreliable.

I ended up with the Canon S95 because all the reviews I looked at said this was the camera that good photographers liked to get as their point and shoot. It’s got tons of features, so you can fool around with aperture, focal distance, colour balance, etc.

However, it’s not a cheap camera… :( I was lucky and managed to get it on sale and I’ve been really happy with it ever since.

My problem at the moment is justifying bizarre clothing choices under the mantra of “I only get to be an art student for 2 more years.”.

Yesterday I bought a cape. Yes, it was Â£40 down from Â£85 (thanks, TK Maxx!). Yes, it’s wool and waterproof and will keep me warm while looking stylish. Yes, it’s awesome and makes me feel like a member of the border patrol of a made up European Alpine nation.

I am also considering doing some outlandish things with my hair, but that would be a poor financial decision as it would dramatically affect my employability during the holidays. But I want to embrace my art student lifestyle… when else could I have a shaved head or pink hair or wear a cape?
It’s the old toss up between instant fun and long term boringness perhaps leading to financial security (yawwwn) :(

Oh no, I’m sticking with this art malarkey long term, this is a life sentence. My fear is that potters/ceramicists are supposed to be, well, down to earth. As a bunch we generally look more like Grateful Dead fans and less like the Scissor Sisters.

You have a point with “go work in a tattoo shop”. Over the summer I generally work in an office environment to make money to tide me over the months I’m at university. I can’t work in my chosen field away from uni (no kiln, wheel, glazes), but I do have other craft skills, so maybe it’s time I focused on making money creatively instead.

You’re also right again with “there’s no compulsory age for becoming a square”. My mum has purple streaks in her silver hair :D

First off: capes are awesome. Back in college, a friend of mine and his girlfriend had matching capes. However, this was in Houston (The Swamp City That Oil Built), so they didn’t get to wear them much.

And who says that you have to choose between the two? Forty pounds sterling (sorry, I’m American, so I love writing out the whole phrase) aren’t going to make or break your long term financial security.

As we GRS readers know but often forget, the idea behind Good Personal Finance isn’t to live on ramen and Goodwill while you’re young so that you can “someday” do whatever you want; rather, the idea is to be intentional. Have a plan. Have a system. Be conscientious.

But no, actually often apply this idea by Nietzsche who said, more or less, that guilt only adds a second stupidity to the original one (the one that caused the guilt). He said it a lot better and I don’t have time to find the quote right now but you probably can.

So– making reparations is more productive than going to prison (physical or mental).

That’s a great thought – I was thinking something similar, but not quite so eloquently. Time is a precious resource, not unlike money. So if you waste money, and then spoil your time over the next few days by beating yourself up about it, you have wasted even more precious finite resource!

While I still make plenty of mistakes, I find that I’m able to minimize them by working holistically on my problems. JD – your weight loss is a good example. It seems that you accomplished the great fitness goal by focusing mostly on the exercise part of the equation. You seemed to tinker with the food part, but you didn’t truly overhaul it like you did with exercise. Whenever I partially change like that, the part that I didn’t fix rears its head to sabotage the part of me that I did fix. Humans are interesting that way. Overhauling the diet to include mostly whole grains, nuts, vegetables and fruits might help you kick the issue for good!

Well that’s weird. I was just thinking about this… I recently spent a ton of money on new work clothes. Mind you, I have been SO GOOD on not spending money on clothes in the past year. But the thought of going back to teach and looking good in new clothes got me to the “sale” at the Limited. $350 later and I’m kicking myself for it. Now I have another credit card bill.

dropped 12k on grad school but I overextended myself (working 2 jobs at same time) and ended up flunking out.

what was supposed to be an investment in my future job prospects and earning turned into a gigantic hole in the budget. for someone who pinches pennies in many areas, this amounted to a heck of a lot of bagged lunches or home haircuts.

When I screw up financially (which usually comes in the form of an ill-advised purchase), I remember something I learned in, of all things, a time management class. It was this: most people significantly OVERestimate what they can do in a day, but significantly UNDERestimate what they can do in a year.

What does that have to do with financial mistakes? The scene plays out like this: first I do something dumb, that’s strike one. I realize it sooner or later, and start to compensate by cutting back to regain some ground. But this always seems like a long, slow process – I feel like I want to correct the mistake as fast as I made it. When I realize that isn’t realistic, that can get discouraging – and if I let it, that’s strike two.

So that’s when I remember the time management lesson, and think in terms of a year instead of a day. In a year’s time, the mistake will be a tiny speed bump in the rear view mirror – but ONLY if I continue in my efforts to make up for it. This helps me get a little perspective on what’s realistic, and allows me to turn the mistake into a lesson instead of a trend.

Thank you for the great advise, everyone, regarding cameras. I really feel the way to go is to buy something cheap, learn to take photos with it, and set up a small savings to buy a larger camera down the line–should my interest spark to new heights ;O)

An iPhone was stolen from me (Rs:30k)
Missed a flight due to confusion during booking (6k)
Had to board a flight today but fell ill, so thats (5K)
Anonymous (300-400rs)
etc..

my point is, I’v been losing/wasting money and the guilt is killing me..
Each of the above instances have happened 3-4 months apart.. Im beginning to think that something is wrong with me.
I am 20yrs old, a student …what i dont understand is that I have complete control over finances, I do not spend unnecessarily,
i know that the amount is not HUGE, but it is Bad.
How do i help myself, since …i try, but in some way or the other.. i end up losing money!

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My name is J.D. Roth. I started Get Rich Slowly in 2006 to document my personal journey as I dug out of debt. Then I shared while I learned to save and invest. Twelve years later, I've managed to reach early retirement! I'm here to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you get rich slowly. Read more.

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